Crossbench “especially concerned” for small business in part two of Closing Loopholes

They may have partnered with the federal government on December’s surprise industrial relations reforms, but a fresh report shows crossbench Senators Jacqui Lambie and David Pocock have significant concerns over the second half of Labor’s Closing Loopholes package.

In a shock move, Lambie and Pocock sided with the federal government to pass the first half of the highly contentious Closing Loopholes package, after Labor repeatedly signaled it would not split the 900-page bill into smaller parts.

The move — which saw non-contentious elements of the bill passed into law, along with more hotly contested measures surrounding wage theft and ‘same job, same pay’ rules — allowed much of the Closing Loopholes package to pass before the tabling of a Senate committee report on the entire omnibus bill.

That report was tabled on Thursday, allowing the federal opposition to lash changes it sees as harmful to the small business sector.

It also highlights the lingering concerns of Pocock, Lambie, and the Greens, suggesting further amendments are likely before the remainder of Closing Loopholes passes into law.

Pocock: More certainty for SMEs over casual rules

As expected, the report showcases broad support from Labor for the package — and criticism from the federal opposition, which expanded on its view that a new definition of ’employee’, and a reworked casual conversion pathway, will wrap small employers in red tape.

A somewhat more nuanced take came from Senator Pocock, who welcomed much of the package but maintains serious reservations about how the fine print will affect small businesses.

Pocock said that “at a minimum” consider amendments that “harmonise” the employee and employer-led casual conversion pathways.

Employer groups have railed against Labor’s plan to create a new casual conversion pathway, saying it, along with the dreaded changes to the definition of employment, will deter small businesses from hiring casuals at all.

Pocock said the bill should be updated to “include a right to refuse casual conversion on fair and reasonable grounds”, giving small employers more certainty.

“Smaller businesses often lack the predictable income flow and certainty of future viability to commit to offering casuals’ permanent employment,” he said.

“A concern has been raised that not offering scope for small businesses to refuse conversion requests on fair and reasonable grounds might cause them to avoid employing casuals at all, given the risk of being forced to offer permanency with no recourse.”

Pocock said Labor’s proposed definition of employment should be banished — or at the very least, postponed.

“All peak employer groups have called for this section to be deleted,” he said.

“Failing that, they have argued it should be amended to delay the start date until 1 July 2025, be amended to make clear that the change should not alter existing contractual arrangements,” and further amended to ensure workers covered by minimum standards orders not be considered employees.

Minimum standards orders refers to Labor’s proposal that the Fair Work Commission be empowered to set minimum standards in the gig economy for ’employee-like’ workers.

“The employee-like aspect of these reforms, as drafted, go far beyond the scope of capturing the gig platform courier drivers and would impact sectors like personal and aged-care providers,” Pocock continued.

“It is important that the reforms only capture those they intend to.”

Lambie: “Especially concerned” for small business

Concerns were shared by Lambie, whose support in the Senate may prove critical to Closing Loopholes‘ passage into law.

If passed in its current form, the bill “has the capacity to contribute to cost of living pressures, harm businesses by increasing red tape, create confusion and complexity, discourage innovation, create barriers for employers seeking to hire staff, and drive-up costs,” Lambie said.

“The [Jacqui Lambie Network] is especially concerned by the impact the Bill will have on small businesses.”

In particular, casual conversion tweaks run the risk of adding “greater red tape to an already heavy administrative load” for small businesses, she said.

The plans to rework the definition of employment are also cause for concern, Lambie continued.

“The JLN believes that terms of a contract should not be overridden by abstract and imprecise set of indicia that will be used to determine the employment status of a worker.”

Civil penalties for employers who break the rules ought to be right-sized, Lambie added.

“Under the new provisions, many small businesses risk losing their business under the weight of significant penalties,” she said.

“To reduce unintended consequences, the proposed penalties should be considered alongside the capacity of businesses to pay and based on direct reference to the company’s turnover.”

“Right to disconnect” stirs new debate

Beyond the points brought up by the Senate crossbenchers, the committee as a whole brought its own recommendation: an amendment creating the “right to disconnect”, enshrined by the Fair Work Act.

Such a shake-up would provide workers the ability to log off their laptops, power down their phones, and shut their email tabs when out of working hours.

“Modern Awards and enterprise agreements should incorporate a compliant right to disconnect term, and the FWC should be empowered to make ‘stop orders’ if a dispute cannot be resolved at the workplace level,” the committee recommended.

The Greens wholeheartedly backed the proposed amendment, urging the Parliament to legislate the measure — and provide extra support to small business employers blocked from contacting their staff after-hours.

Pocock backed the proposed amendment, but noted that “additional resourcing” should be “allocated to develop and disseminate guidance for small businesses on the right to disconnect”.

Debate over the second tranche of Closing Loopholes reforms is likely to dominate the opening weeks of Parliament, which will sit from next week.